Profit and Loss Appropriation Account Format
The Profit and Loss Appropriation Account is an extension of the Profit and Loss Account for a partnership that shows how the net profit is shared among the partners. It is used to record interest on capital, partners' salaries and interest on drawings before the remaining profit is divided according to the profit-sharing ratio.
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Blank format
| Particulars | RM | RM |
|---|---|---|
| xx Partnership | ||
| Profit and Loss Appropriation Account | ||
| for the year ended xx | ||
| Net profit | XX | |
| Add: Interest on drawings | ||
| Partner xx | XX | |
| Partner xx | XX | XX |
| XX | ||
| Less: Interest on capital | ||
| Partner xx | XX | |
| Partner xx | XX | XX |
| Less: Partner's salary | ||
| Partner xx | XX | XX |
| Divisible profit | XX | |
| Partners' share of profit: | ||
| Partner xx (xx) | XX | |
| Partner xx (xx) | XX | XX |
| XX |
Begin with the three-line heading (partnership name, account name, and 'for the year ended ...'). Use two RM columns: the inner column for each partner's individual amounts and the outer column for combined figures, subtotals and ruled totals.
Parts of the format
- Three-line heading
- The partnership name, the title 'Profit and Loss Appropriation Account', and the period 'for the year ended ...' are centred at the top.
- Net profit
- The starting point of this account, brought down from the Profit and Loss Account before any appropriation is made.
- Add: Interest on drawings
- Interest charged on partners' drawings is added to net profit because it increases the profit available for sharing.
- Less: Interest on capital and salaries
- Interest on capital and partners' salaries are deducted first as specific rewards to the partners before the balance is shared.
- Divisible profit
- The remaining profit after all appropriations; this is the amount divided according to the profit-sharing ratio.
- Partners' share of profit
- The divisible profit is allocated to each partner in the agreed ratio, and the total must equal the divisible profit.
Filled example
Perabot Mewah is a partnership owned by Aiman and Bala who share profits and losses in the ratio 3:2. For the year ended 31 December 2025 the business earned a net profit of RM60,000; interest on capital was Aiman RM5,000 and Bala RM3,000; Bala received a salary of RM12,000; and interest on drawings was Aiman RM500 and Bala RM300.
| Particulars | RM | RM |
|---|---|---|
| Perabot Mewah Partnership | ||
| Profit and Loss Appropriation Account | ||
| for the year ended 31 December 2025 | ||
| Net profit | 60,000 | |
| Add: Interest on drawings | ||
| Aiman | 500 | |
| Bala | 300 | 800 |
| 60,800 | ||
| Less: Interest on capital | ||
| Aiman | 5,000 | |
| Bala | 3,000 | 8,000 |
| Less: Partner's salary | ||
| Bala | 12,000 | 12,000 |
| Divisible profit | 40,800 | |
| Partners' share of profit: | ||
| Aiman (3/5) | 24,480 | |
| Bala (2/5) | 16,320 | 40,800 |
| 40,800 |
Common layout errors
Related chapters and procedures
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